This potential acquisition was on track to be one of the largest leveraged buyouts in history.
Stripe, alongside buyout firm Advent, has reportedly decided to abandon its efforts to acquire PayPal, according to insiders familiar with the situation. Had it proceeded, this acquisition could have marked one of the largest leveraged buyouts ever, with estimates surpassing $50 billion.
Earlier this July, as PayPal’s stock was trading at a historic low with a valuation of $40 billion, Stripe and Advent allegedly made a bid of around $53 billion. This initial offer was turned down, prompting the prospective buyers to consider increasing their bid. At one point during the COVID pandemic, PayPal’s valuation peaked at approximately $320 billion.
Stripe and Advent likely perceived PayPal’s recent market challenges as an opportunity for a substantial purchase. However, PayPal’s latest quarterly results exceeded many forecasts, and the speculation around a takeover contributed to a 40% rise in its stock price. This surge may have made a leveraged buyout less achievable.
Since taking the helm in March, PayPal’s new CEO, Enrique Lores, has been focused on restructuring the company into three divisions: checkout, Venmo, and payment/crypto services. A merger between Stripe and PayPal could have lessened Stripe’s dependency on major credit card companies, granting it access to PayPal’s Venmo and crypto functionalities. There remains the possibility that Stripe and Advent may consider making an offer for PayPal in the future.
